Trade Facilitation

1

Outline

I. New WTO Trade Facilitation Agreement (TFA)

– Background

– Structure

– Next steps

II. Linkages with SPS/TBT Agreements

III. Overview of STDF work on Facilitating Safe Trade

2

Time to Export/Import

0

5

10

15

20

25

30

35

40

AFRICA SOUTHEAST ASIA OECD SINGAPORE

TIME TO EXPORT (DAYS)

TIME TO IMPORT (DAYS)

Source: World Bank Doing Business 2015 3

Costs to Export/Import

0

500

1000

1500

2000

2500

3000

AFRICA SOUTHEAST ASIA OECD SINGAPORE

COST TO EXPORT (USD)

COST TO IMPORT (USD)

Source: World Bank Doing Business 2015

4

Exporter

Sources of Delay/Costs

• Infrastructure

• Technology

• Border procedures,

processes, controls

• Document and information

requirements

• Fees and charges

Health Authority

Customs

Carrier

Port Authority

Plant/Animal Inspection Authority

Licensing Authorities

Advising Bank

Issuing Bank

Agent

Freight Forwarder

Consulate Importer

5

6

Companies sometimes spend more money complying with customs regulations than the amount earned in revenue by Customs

9 billion documents each year to process movement of goods!

Why does it matter?

Estimated benefits

1% decrease in global trade costs would yield an increased global income of USD 40 billion at a minimum. OECD Trade Policy Working Paper, No. 118, 2011

Reduction of total trade costs of 14.5% for low income, 15% for lower-middle income, and 13.2% for upper-middle income countries OECD Trade Policy Working Paper, No. 144, 2013 Up to two-thirds of the total gains

to be obtained by developing countries. OECD TD/TC/WP(2003)31/FINAL

7

8

But why TF at the WTO?

Common rules for 161 WTO Members

Enforcement through dispute settlement

Pre-existing provisions with basic rules (in particular Articles V, VIII, and X) 8

• Expedite movement, release & clearance of goods,

including goods in transit

• Improve cooperation between customs/other authorities

• Enhance technical assistance and build capacity

Objectives

9

Section I The TFA contains 12 Articles with approximately 40 “technical measures”

Section II Special provisions for developing and least-developed country Members

Section III Final provisions and institutional arrangements

TFA structure

10

Section I The trade facilitation Agreement contains 12 Articles with approximately 40 “technical measures”

Article 1 Publication & Availability of Information

Article 2 Comment and Consultations

Article 3 Advance Rulings

Article 4 Procedures for Appeal or Review

Article 5 Measures to Enhance Impartiality, Non-Discrimination & Transparency

Article 6 Disciplines on Fees and Charges

Article 7 Release and Clearance of Goods

Article 8 Border Agency Cooperation

Article 9 Movement under Customs Control

Article 10 Import, Export &Transit Formalities

Article 11 Freedom of transit

Article 12 Customs Cooperation

11

Article 1: Publication & Availability of Information

1. Publication

2. Information available through Internet

3. Enquiry Points

4. Notification

12

Article 7: Release & clearance of goods (1)

1.

Pre-arrival processing

2.

Electronic payment

3.

Separation of release from

final determination

4. Risk

Management

13

5.

Post-clearence

audit

6.

Average release time

7.

Trade Facilitation

Measures for Authorized Operators

8.

Expedited Shipments

9. Perishable

Goods

Article 7: Release & clearance of goods (2)

14

Articles 8: Border Agency Cooperation

Encourage all border authorities & agencies to cooperate:

• Alignment of: working days and hours, procedures, and formalities

• Development and sharing of common facilities

• Joint controls

• Establishment of one stop border post control

15

Section II Special provisions for developing and least-developed country Members

Category A

Developing: To be implemented at the time the TFA enters into force LDCs: To be implemented within one year after the TFA enters into force

Category B

To be implemented after a transitional period following the entry into force of the TFA

Category C

To be implemented after a transitional period and requiring the acquisition of assistance and support for capacity building

16

Article 23

1.Committee on TF: It will oversee the implementation of the TFA

2.National Committee: Each Member shall establish (or maintain) a national committee

Section III Final provisions and institutional arrangements

17

WTO Trade Facilitation Negotiations Current Status

Negotiations CONCLUDED Ministerial

Decision Protocol of

Amendment

Prepcom Legal Scrub Concluded

2004-2013

Bali December

2013

July 2014

Negotiations

Notify Acceptance

November 2014

National ratification

Entry into

Force!

2/3 Members

18

How many acceptances have been received?

Thus far… 1. Australia 2. Austria 3. Belgium 4. Belize 5. Botswana 6. Bulgaria 7. China 8. Croatia 9. Cyprus 10. Czech Rep 11. Denmark 12. Estonia 13. Finland 14. France 15. Germany 16. Greece 17. Hong Kong, China 18. Hungary 19. Ireland 20. Italy 21. Japan 22. Korea, Rep of

23. Lao DPR

24. Latvia

25. Liechtenstein

26. Lithuania

27. Luxembourg

www.TFAfacility.org

28. Malta 29. Mauritius 30. The Netherlands 31. New Zealand 32. Nicaragua 33. Niger 34. Norway 35. Poland 36. Portugal 37. Romania 38. Slovak Rep 39. Slovenia 40. Spain 41. Sweden 42. Switzerland 43. Chinese Taipei 44. Thailand 45. Togo 46. Trinidad and Tobago 47. Ukraine 48. United Kingdom 49. United States 50. FYR Macedonia 51. Pakistan

19

WWW.TFAFACILITY.ORG

20

Linkages with the SPS and TBT Agreements

21

avoiding discrimination and

unnecessary obstacles to international trade

allowing Members to protect health / fulfill legitimate

objectives at levels they

consider appropriate

…trade facilitation

Members’ right to regulate…

SPS/TBT Agreements

22

The SPS & TBT Agreements cover…

SPS: All types of measures

end product criteria

processing methods

quarantine measures

certification

inspection

testing

sampling …

…some also covered under TFA

TBT: Standards, technical regulations, conformity assessment procedures

sampling, testing, inspection

evaluation, verification, assurance of conformity

registration

accreditation

approval …

23

Enforcement/implementation of SPS measures

• Members required to avoid unnecessary trade disruption and transaction costs for traders when performing control, inspection and approval procedures

– no undue delays; – information requirements limited to what is necessary; – non-discriminatory fees (not higher than actual cost of

service), – non-discrimination in siting of facilities and selection of

samples; – procedure to review complaints, take corrective action,

etc. SPS Annex C closely linked to TF

24

SPS Agreement International standards

For example, relevant Codex standards include:

• Principles for Food Import and Export Inspection and Certification (CAC/GL 20-1995)

• Guidelines for the Exchange of Information between Countries on Rejections of Imported Foods (CAC/GL 25-1997)

• General Guidelines on Sampling (CAC/GL 50-2004)

• Recommended Methods of Sampling for the Determination of Pesticide Residues for Compliance with MRLs (CAC/GL 33-1999)

Important to involve standard-setting bodies in TF work 25

TBT Agreement: Conformity assessment procedures

26

• Complete as expeditiously as possible

• Publish standard processing period

• Limit info requirements

• Impose equitable fees

• Avoid unnecessary inconvenience from siting of facilities, selection of samples

• Offer procedure to review complaints

• Use international standards

• Notify / publish

TFA Final Provisions: paragraph 6

“nothing in this Agreement shall be construed as diminishing the rights and obligations of Members under the TBT and SPS Agreements.” BUT….. some TRA provisions may be "SPS-plus“ or “TBT-plus” adding obligations going beyond SPS & TBT Agreements

27

“SPS-or TBT -plus”

Provide advance rulings besides tariff

classification and origin

(TF Art. 3)

Publish wide range of information related to

import/export requirements and procedures

(TF Art. 1)

Border Agency Cooperation

(TF Art. 8)

Inform on detention of goods and facilitate

test procedures

(TF Art. 5) Allow pre-arrival

processing / Publish average release times

(TF Art. 7)

Freedom of transit: Limit formalities and documentation requirements

(TF Art. 11)

Review and publish fees and charges

(TF Art. 6)

Review and reduce import/export transit

formalities

(TF Art. 10)

28

Considerations for implementation

29

• awareness of SPS/TBT/customs officials regarding rights/obligations under all relevant WTO Agreements; need for coordinated approaches, systems

• involvement of SPS & TBT officials in TF needs assessments; opportunity for SPS & TBT entities to benefit from increased funding opportunities

• national SPS, TBT and TF committees/bodies, Enquiry Points need to communicate, have contact points in each other’s structures

• TA providers in SPS/TBT/TF areas need to have familiarity

with all three topics

Implementing SPS measures to facilitate safe trade

30

Context

• Trade costs in agriculture much higher than in manufacturing, affecting competitiveness (WB, AfT at Glance - 2015)

• Outdated border procedures and red tape greater barrier to trade than tariffs (WB, ITC, etc.)

• Performance gap between health/SPS agencies and others

• Lower performing countries:

• Much more physical inspection

• Longer import / export lead times

0%

5%

10%

15%

20%

25%

30%

2010 2012 2014

Private sector % rate of satisfaction with selected border agencies

(bottom quintile respondents)*

Customs

Quality and Standards

Health/SPS

Source: World Bank Logistics Performance Index

31

Research in Southeast Asia and Southern Africa: How are SPS measures implemented in practice?

• Focus on SPS controls for specific products (Article 8 / Annex C of SPS Agreement)

• Are there transaction costs that can be reduced without compromising health objectives?

• What are good practices to ensure health protection, while minimizing transaction costs?

• No direct link to WTO TFA – but opportunity to enhance dialogue and leverage additional funds to improve SPS border management

32

Examples of SPS-related procedural obstacles to trade

Challenges • Complex and lengthy procedures

• Excessive document requirements

• Limited information

• Multiple inspections

• Little coordination between border agencies

• No complaints / appeal procedures

• Arbitrariness, unpredictability

Consequences

• More controls than justifiable

• Longer than necessary waiting times

• Uncertainty

• Increased costs for traders, sometimes also for government

33

Key findings of STDF research

• SPS measures may result in justifiable transaction costs based on the need to protect health

• Sometimes, ineffective and inefficient SPS controls result in poor

health protection – and disrupt trade more than necessary

• Opportunities to enhance health protection and reduce costs

(win-win) through better implementation of SPS Agreement:

• Streamline / simplify regulations

• Implement risk-based approaches

• Improve transparency

• Increase harmonization with international (Codex, IPPC, OIE) standards

• Improve coordination among SPS agencies and with Customs

34

High-level panel during AfT Global Review (Geneva, July 2015)*

• How can robust, science- and risk-based SPS controls be married with trade facilitation?

• Is it possible to effectively ensure health protection, while reducing SPS trade costs? How?

Podcast available at: https://www.wto.org/audio/2015_06_30_session3_gr5_panel_discussion.mp3 35

New STDF Film: Safe Trade Solutions*

What are Chile, Peru and Colombia doing to enhance health protection and speed up trade?

• Better coordination between SPS agencies and with Customs

• Streamlined and risk-based controls

• Joint inspections

• More transparency

• Integrating SPS controls in national single windows

* See: http://www.standardsfacility.org/video-gallery and https://www.youtube.com/watch?v=Eww1MsewAOk 36